UK Autumn Budget: Healey Proposes £100 Energy Rebates and Wage Hikes
The new Labour government targets stagnant living standards with direct household support, while deferring details on long-term defence spending targets.
By Ana Castro ·
Three months after Andy Burnham assumed the premiership, the UK government released its first fiscal plan under new Labour leadership. Chancellor John Healey presented the Autumn Budget on Wednesday, framing the measures as a response to years of economic stagnation driven by austerity, Brexit, and the pandemic. Healey stated the package aims to provide "breathing space" for working families.
The context for the fiscal moves is a sharp decline in living standards. Global fuel prices surged recently after the US-Israel war on Iran led Tehran to close the Strait of Hormuz. This disruption affects approximately 20 percent of global oil and liquefied natural gas transit. The Office for Budget Responsibility reported no expected growth in real earnings for next year and downgraded its 2027 growth forecast to 1 percent.
Healey announced a one-off payment of £100 for 20 million households to offset energy bills. Eligibility is based on home valuations from April 1991, with properties valued at £88,000 or less qualifying. Additionally, the temporary cut to Value Added Tax on energy bills will extend until July 1, reducing the annual price cap by £50.
James Meadway, co-director of the think tank Verdant, argued the measures do not address the scale of the cost-of-living crisis. He noted that government figures project conditions will worsen over the next year. Meadway described the package as a collection of small items that fall short of the historical decline in living standards.
In the defence sector, Healey confirmed funding for a £15 billion Defence Investment Plan and pledged to cover a £4.7 billion gap by reprioritizing budgets. He did not specify how the government will meet the NATO commitment to spend 3.5 percent of GDP on defence by 2035. That detail is reserved for next year's spending review. NATO Secretary-General Mark Rutte welcomed the plan, citing a "strong commitment" to transatlantic security.
Salary floors will rise by 3.9 percent in April. The National Minimum Wage for workers aged 18 to 20 will increase from £10.85, while the National Living Wage for those 21 and over will rise from £12.71. The government will also temporarily double the Bank Corporation Tax Surcharge from 3 percent to 6 percent for 15 months, ending in March 2028. This measure is expected to raise £1.5 billion.
Housing policy includes a new First Time Buyer savings account launching in 2029. It will replace the Lifetime ISA and offer a 25 percent government bonus on deposits up to £4,000. The penalty for using Lifetime ISA funds to buy a home over £450,000 will drop immediately from 25 percent to 20 percent. The government will also spend £432 million over two years to reduce street homelessness, a priority for Prime Minister Burnham.
